Share options for executives could become conditional
February 2, 2006
By Ren�e Bonorchis
Good news on the executive remuneration front is that there are rumours that an increasing number of remuneration committees are insisting that performance conditions are attached to the awarding of share options.
For most of us who work hard to explain to our bosses precisely why we think we should get a tiny pay increase, this sort of development at executive level hardly seems worth mentioning.
But it is worth mentioning. To date, surprisingly little attention has been paid to the setting and attaining of performance targets before multimillion-rand option awards can be collected.
This absence of performance targets adds to the public perception that well-placed corporate executives are picking up huge packages for doing little more than pitching up at work every day and riding the crest of the economic wave, not to mention the stock market wave.
Performance targets must be set and they should be set so that they have some credibility and test the actual performance of individual executives. Increasing earnings in a buoyant economy is not a credible test; nor is a rising share price in a bull market.
Unfortunately, to date it is just rumoured that the remuneration committees are beefing up performance criteria and are approaching institutional shareholders for their approval. The next big step would be for companies to include these targets in their annual reports, as they are required to do in the UK. AC
COAL
Can the world market absorb the additional 20 million tons a year of South African coal exports that the local industry is proposing?
The question, a topical one at this week's McCloskey coal conference in Cape Town, was answered in the affirmative by coal experts, greatly comforting at least one senior Spoornet executive whose task it is to add billions of rands worth of capacity to the Mpumalanga-Richards Bay coal corridor so that 92 million tons of coal can be transported via rail to the harbour in northern KwaZulu-Natal each year.
Actually, the answer of Colin Gubbins, a director of McCloskey, the coal consultancy group, was "yes, probably".
Gubbins reckoned that world coal demand would grow 11 percent from 591 million tons in 2008 to 679 million tons in 2020, with the greatest growth coming from nations in the Pacific.
He, nevertheless, forecast demand growth in South Africa's biggest markets - Europe, the US and India. "India is definitely a very large potential market for South African coal," Gubbins said.
He ranked South Africa and Indonesia in joint second place on the global cost curve, pipped by South America, but ahead of Australia and Russia.
Long-term issues local coal exporters had to face included whether South American producers could shut them out of the US market due to lower freight charges, and whether Indonesia's growing coal industry would make inroads into the market along India's west coast.
On the supply side of the equation, Gubbins conceded a streak of "caution" in his numbers.
In fact, he was so conservative that his projection for South African supply in 2020 was just 84 million tons, whereas the coal terminal expansion at Richards Bay envisages a rise in exports to 92 million tons a year by 2008.
This did not stop Fuzile Magwa, a Spoornet executive manager, saying he was more confident the expansion was the "right way to go" after hearing the McCloskey outlook for coal.
McCloskey said research from the big three power equipment providers showed that 40 percent of electricity turbine orders in the next decade were for coal units, while 25 percent to 30 percent were earmarked for gas plants. It said this was being driven by gas-supply concerns and clean coal technology. IS
Brett Kebble
Frustration must be running high for the police investigating the ugly murder of this controversial former mining executive. If media reports are true, yesterday morning must have been especially frustrating.
According to news agency Sapa, Talk Radio 702 reported that a 28-year-old advertising executive had been arrested for Kebble's murder in the up-market suburb of Birdhaven in the early hours yesterday.
However, Sally de Beer, the national spokesperson for the police, said no arrests had been made in connection with Kebble's murder. She said she was not able to comment on the ongoing investigation other than to say leads were being followed and once arrests were made the police would comment.
According to Sapa, six heavily armed police stormed a flat at 4am. Sapa said Talk Radio 702 had reported the man was released after police realised they had the wrong man.
The man's girlfriend told the radio she had overheard the police saying they had the wrong man. She had also heard that another house had been raided earlier, it was reported.
The police have been criticised for bungling the investigation of Kebble's murder, with criticisms ranging from the fact that the scene was not cordoned off to the fact that the car in which he was murdered was cleaned within hours of being towed away.
Despite this, Kebble's family, at the request of police commissioner Jackie Selebi, put an end to the private investigation they were running. But today will be the 128th day since Kebble was discovered bludgeoned with four bullets lodged in his body. NS
GM CROPS
When it comes to a controversial issue such as the genetic manipulation of food and other crops, emotions are bound to run high, which is all the more reason for clarity and upfront discussion. The issues brought to the fore by environmental group Biowatch this week could be particular cause for concern.
These issues include the issuing of permits for genetically modified (GM) crops by the department of agriculture without it clearly stating its reasons for doing so, a lack of guidelines for risk assessments and the absence of verification of risk assessments. The picture painted raises alarms and questions about whether the government is taking this issue seriously.
The answer that the cultivars have already been tested in the US is not good enough. How easy would it be for an unscrupulous individual or company to use false documents and bring GM cultivars into the country? The processes will have to be stringent and meticulous in order to cultivate peace of mind. NM
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